Mexican peso loses almost 50 cents due to advance of the dollar

The Mexican peso depreciated sharply against the American dollar this Monday in the face of a global strengthening of the greenback. The nervousness in the market due to the high inflation caused the currency to lose more than 2 percent.

The exchange rate ended this day at 20.4565 units compared to a record of 19.9800 units on Friday, with data from the Bank of Mexico (Banxico). This means that the Mexican currency fell 47.65 cents or 2.39 percent.

During the day, the pair reached a maximum of 20.5056 units, a level not seen in this pair since April 28. The low of the session was located at 20.0144 units, just above the psychological level of 20 units per dollar.

Meanwhile, the Dollar Index (DXY), which measures the greenback with a basket of six benchmark currencies, was up 0.90% at 105.09 units at the close, boosted by high US inflation data for May.

The United States Department of Labor announced on Friday that inflation in that country accelerated to a pace of 8.6% year-on-year, its highest level in 40 years. The data caused bets on rate hikes to grow.

“Inflation data released on Friday has led investors to believe that there will be faster rate hikes and a 75 basis point rate hike is priced in in September, which would be the strongest since 1994,” ATFX explained.

For now, the entire 20-unit level could act as medium-term support, although pressure could remain. On Wednesday, the Federal Reserve (Fed) will announce its monetary policy decision.

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